Home Federal Bancorp(HFBL) - 2023 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1: Financial Statements Presents Home Federal Bancorp's unaudited consolidated financial statements as of March 31, 2023, with accompanying notes on policies and a recent acquisition Consolidated Statements of Financial Condition Total assets increased to $686.0 million by March 31, 2023, driven by net loan growth, while equity slightly decreased Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | June 30, 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | $685,985 | $590,480 | +16.2% | | Cash and Cash Equivalents | $45,568 | $64,078 | -28.9% | | Loans Receivable, Net | $486,394 | $387,873 | +25.4% | | Goodwill | $2,990 | $0 | N/A | | Total Liabilities | $635,862 | $538,133 | +18.2% | | Total Deposits | $614,374 | $531,991 | +15.5% | | Total Stockholders' Equity | $50,123 | $52,347 | -4.2% | Consolidated Statements of Income Net income for the nine-month period increased to $4.45 million, while quarterly net income decreased to $1.06 million due to higher expenses Quarterly and Nine-Month Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $5,473 | $4,268 | $16,102 | $12,678 | | Provision for Loan Losses | $150 | $0 | $718 | $61 | | Non-Interest Income | $208 | $836 | $1,594 | $2,888 | | Non-Interest Expense | $4,498 | $3,558 | $11,809 | $10,778 | | Net Income | $1,062 | $1,277 | $4,446 | $3,805 | | Diluted EPS | $0.34 | $0.37 | $1.41 | $1.10 | Consolidated Statements of Comprehensive Income Total comprehensive income for Q1 2023 was $1.67 million, and $4.17 million for the nine-month period, influenced by net income and unrealized gains/losses Comprehensive Income Summary (in thousands) | Component | Q1 2023 | Q1 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $1,062 | $1,277 | $4,446 | $3,805 | | Other Comprehensive Gain (Loss), Net of Tax | $603 | $(881) | $(275) | $(1,094) | | Total Comprehensive Income | $1,665 | $396 | $4,171 | $2,711 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased to $50.1 million by March 31, 2023, primarily due to stock repurchases and dividends, partially offset by net income - Key drivers for the change in stockholders' equity during the nine months ended March 31, 2023 included: - Net Income: +$4.4 million - Company Stock Purchased: -$6.0 million - Dividends Paid: -$1.2 million - Changes in Unrealized Loss on Securities: -$0.3 million[20] Consolidated Statements of Cash Flows Net cash and cash equivalents decreased by $18.5 million for the nine months ended March 31, 2023, primarily due to investing activities, largely funded by financing and operating cash flows Cash Flow Summary for the Nine Months Ended March 31 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $8,719 | $16,044 | | Net Cash Used in Investing Activities | $(117,716) | $(47,593) | | Net Cash Provided by Financing Activities | $90,487 | $6,212 | | Net Decrease in Cash and Cash Equivalents | $(18,510) | $(25,337) | Notes to Consolidated Financial Statements Notes detail accounting policies, the $10.2 million acquisition of Northwest Bancshares resulting in goodwill, and provide breakdowns of the loan portfolio and allowance for loan losses - On February 1, 2023, the Company completed the acquisition of Northwest Bancshares Corporation for an aggregate purchase price of $10.2 million in cash The acquisition resulted in goodwill of $3.0 million and a core deposit intangible of $1.5 million[149][150] Loan Portfolio Composition (in thousands) | Loan Type | March 31, 2023 | June 30, 2022 | | :--- | :--- | :--- | | One-to-Four Family Residential | $173,444 | $120,014 | | Commercial Real Estate | $152,092 | $127,589 | | Commercial Loans | $51,490 | $44,487 | | Other | $114,480 | $100,225 | | Total Loans | $491,506 | $392,635 | - The allowance for loan losses increased to $4.9 million as of March 31, 2023, from $4.5 million at the beginning of the period, with a provision of $718,000 recorded for the nine months[88] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses $686.0 million asset growth driven by net loans and the FNBB acquisition, quarterly net income decline, nine-month improvement from net interest income, and strong regulatory capital - Total assets increased by $95.5 million (16.2%) to $686.0 million at March 31, 2023, from June 30, 2022, primarily driven by a $98.5 million (25.4%) increase in net loans receivable[166] - The acquisition of First National Bank of Benton (FNBB) contributed significantly to growth, adding $53.3 million in loans and $77.9 million in deposits[168][175] Net Interest Margin and Spread | Period | Net Interest Spread | Net Interest Margin | | :--- | :--- | :--- | | Three Months Ended March 31, 2023 | 3.15% | 3.56% | | Three Months Ended March 31, 2022 | 3.13% | 3.27% | | Nine Months Ended March 31, 2023 | 3.55% | 3.84% | | Nine Months Ended March 31, 2022 | 3.03% | 3.19% | - At March 31, 2023, the Bank exceeded all regulatory capital requirements, with a total risk-based capital ratio of 12.91%[178][203] Item 3: Quantitative and Qualitative Disclosures About Market Risk This section is indicated as not applicable for the current reporting period - This item is not applicable[210] Item 4: Controls and Procedures Disclosure controls and procedures were deemed effective as of March 31, 2023, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the period covered by this report[211] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls[212] PART II - OTHER INFORMATION Item 1: Legal Proceedings The company is not involved in any material pending legal proceedings beyond routine ordinary course of business matters - The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business[215] Item 1A: Risk Factors This section is indicated as not applicable for the current reporting period - This item is not applicable[216] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any common stock during the three-month period ended March 31, 2023 - No shares of common stock were repurchased during the quarter ended March 31, 2023[217] Item 3: Defaults Upon Senior Securities This section is indicated as not applicable for the current reporting period - This item is not applicable[218] Item 4: Mine Safety Disclosures This section is indicated as not applicable for the current reporting period - This item is not applicable[219] Item 5: Other Information This section is indicated as not applicable for the current reporting period - This item is not applicable[220] Item 6: Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed with this report include: - CEO Certification (Rule 13a-14(a)/15d-14(a)) - CFO Certification (Rule 13a-14(a)/15d-14(a)) - Certification Pursuant to 18 U.S.C Section 1350 - Inline XBRL Instance Document and related files[224]